On August 17, 2020, the Centers for Medicare and Medicaid Services (CMS) notified Georgia that its application to develop a state-based reinsurance program and make dramatic changes to its individual market under Section 1332 of the Affordable Care Act (ACA) was complete. If approved, Georgia’s waiver would begin in 2022 (although the approval of “phase two” of the waiver would likely be challenged in court). Comments can be submitted through September 16. Following the comment process, CMS and the Department of Treasury will approve or deny the application within 180 days.
The Process
Georgia initially submitted a waiver application in late December 2019. The application had two phases: phase one is for a reinsurance program and phase two involves much broader changes to the state’s individual market, known as the “Georgia Access Model.” The initial Georgia Access Model was criticized for jeopardizing access to comprehensive coverage and failing to satisfy Section 1332’s statutory procedural and substantive guardrails. Some of the same arguments could be made about the latest version of the waiver proposal.
Phase one was deemed complete in early February, but review of phase two was “paused” so Georgia leaders could submit additional information. Months later, Georgia modified its waiver application, extending the timeframe for its reinsurance program and abandoning some components of phase two. Despite these changes, Georgia provided only 15 days of public comment on the revised waiver application: from July 9 to July 23. Georgia consulted with CMS on this shortened comment period and received the agency’s “concurrence” with the approach. This revised application was submitted to CMS shortly thereafter (on July 31) and quickly deemed approved less than one month later (on August 17). The completeness determination is for the entire waiver application (i.e., both phases).
Reinsurance
The waiver application includes only slight changes to the state-based reinsurance program that was deemed complete earlier this year. The program would begin with the 2022 plan year (instead of the 2021 plan year) and total funding would be $398 million for 2022 (instead of $368 million as initially proposed). Of this $398 million, the federal government would contribute about $306 million in pass-through funding and the state would contribute about $92 million from the state general fund. The rest of the program is otherwise the same and would reduce premiums by about 10 percent on average (relative to what premiums would have been in the absence of the waiver) for 2022.
Georgia Access Model
The Georgia Access Model changes would be far more significant. While not as dramatic as Georgia’s initial application, the revised Georgia Access Model would still—if approved—make marked changes to the state’s individual market and would be the broadest waiver ever approved under Section 1332.
Georgia would eliminate the use of HealthCare.gov altogether, making Georgia the only state without a single one-stop-shop marketplace for consumers in need of private health insurance. Without a single marketplace such as HealthCare.gov, consumers would be forced to transition to a highly decentralized enrollment system that is entirely reliant on web-brokers and insurers. As a summary of the revised application puts it, Georgia will “transition responsibility for front-end functions of consumer outreach, customer service, plan shopping, selection, and enrollment from the [federal marketplace] to the commercial market.”
One key motivation for moving away from HealthCare.gov is so Georgia residents can “view the full range of health plans” offered in the state. This is a reference to plans that do not have to comply with the ACA’s consumer protections, such as short-term plans that discriminate against people with preexisting conditions. Elsewhere in the application, Georgia notes that the waiver will allow the sale of non-ACA plans alongside ACA plans, which is otherwise prohibited by federal law and regulations.
Georgia appears to believe that this decentralized system will do a better job of reaching its uninsured residents, asserting that web-brokers will be more incentivized to enroll people in coverage because of commissions. But there are several complicating factors.
First, insurers and web-brokers can already engage in enhanced direct enrollment (EDE) alongside HealthCare.gov. (EDE enables consumers to complete the entire marketplace enrollment process on the website of a third party without ever visiting or creating an account with HealthCare.gov.) There is no obvious reason to think that eliminating HealthCare.gov will somehow increase enrollment in the individual market when activity by insurers and web-brokers is already allowed. Georgia’s waiver would eliminate the largest enrollment pathway (HealthCare.gov) rather than creating new enrollment pathways. Second, insurers generally pay lower commissions for ACA-compliant plans relative to other types of plans. This has created incentives for brokers to promote non-ACA plans over ACA-compliant plans. Thus, relying on insurer commissions to brokers to incentivize higher enrollment could be problematic.
Third, reliance on commissions could cause web-brokers or insurers to steer consumers to certain plans that may not best meet their financial or health needs. Finally, the waiver makes no mention of how the state would address current low awareness due to cuts to marketplace outreach and advertising and the state’s restrictions on the navigator program. Georgia could likely make gains in its insured rate simply from making sure consumers are aware of ACA coverage options and HealthCare.gov, without remaking its individual market using a Section 1332 waiver.
Even as it proposes to decentralize enrollment through a common website, Georgia would assume responsibility for eligibility determinations. The state would validate a consumer’s eligibility for premium tax credits (using ACA eligibility and income requirements) and send this information to the federal government. The federal government would then issue the subsidies to insurers and reconcile subsidies during tax season. Subsidies would only be available for qualified health plans under the ACA, as they are now. But Georgia wants to conduct its own eligibility determinations because it believes doing so will be more accurate: the state believes it can leverage existing infrastructure, use more recent employment data, and integrate Medicaid eligibility determinations.
To make all of this vision a reality, Georgia asks to waive parts of Section 1311 of the ACA to the extent that it is inconsistent with the Georgia Access Model. Section 1311 includes a wide array of ACA requirements. It requires a marketplace in each state to facilitate the sale of ACA plans, prohibits the marketplace from offering non-ACA plans, and identifies the functions that a marketplace must perform, such as plan certification, administration of the navigator program, and eligibility determinations. It applies federal mental health parity protections to ACA plans and directs the federal government to develop plan certification standards related to discriminatory benefit design, network adequacy, quality improvement, use of a standard format to allow plan comparisons, and quality ratings.
The waiver application mentions waiving Section 1311 but does not specify which specific provisions would be waived. For instance, the waiver application makes no mention of the fate of the ACA’s navigator program in Georgia, which marketplaces are required to administer, or any mention of in-person consumer assistance. Georgia only notes that it will set up a website with a list of approved entities that participate in the Georgia Access Model and that responsibility for consumer education and outreach will be placed squarely on insurers and brokers.
The Georgia Access Model would leverage federal EDE standards coupled with to-be-developed state standards. Georgia does not acknowledge concerns about consumer confusion associated with EDE; such concerns have led CMS to increase its standards over the years and, most recently, release guidance on website display requirements, including examples of website content that fails to comply with federal standards. Presumably out of fear of consumer confusion, CMS had to explicitly bar entities from using web displays that could lead a consumer to believe they are visiting HealthCare.gov or implying that ACA subsidies can be used for non-marketplace products.
Potential Impact of Phase II
This post does not include a full analysis of Georgia’s actuarial assumptions and estimates. Others are likely to dive deeper and discuss some arguably questionable assumptions. But, overall, Georgia expects the Georgia Access Model to increase individual market enrollment by an estimated 25,000 individuals. Of these, an estimated 21,250 enrollees would be eligible for marketplace subsidies under the ACA. Georgia believes this will further reduce premiums by about 3.5 percent.
While Georgia notes that it will develop a detailed transition and communications strategy, the state’s estimates account for only minimal coverage losses among the more than 430,000 current enrollees in marketplace coverage in Georgia. According to the state, only an estimated two percent of current enrollees will get lost in the shuffle. This seems to be a particularly rosy estimate given that the waiver would end automatic reenrollment through HealthCare.gov and require consumers to transition to a new website and system. Even if all consumers successfully migrated from HealthCare.gov to one of the private entities, there could be additional consumer confusion from the display of ACA plans alongside the new non-ACA plans, raising the potential that some consumers would enroll in non-comprehensive coverage when they meant to enroll in an ACA plan.
The waiver also inexplicably suggests that consumers will not face additional administrative burdens in a transition to the Georgia Access Model, and that costs to the state for administering the waiver will be less than one percent of the cost of the full program, despite the transition of many more responsibilities (from eligibility determinations to increased oversight) to state officials.
Concerns Raised by Commenters
Many commenters raised these and other concerns during the state-level public comment period. Commenters raised concerns about the privatization of HealthCare.gov, a lack of consumer access, the undermining of protections for people with preexisting conditions, and operational considerations: the new system could result in consumers being steered to plans with high commissions, consumers could face difficulty in navigating multiple websites, and consumers would likely fall through the cracks during the transition away from HealthCare.gov. Other commenters asserted that local brokers and agents are being left out of the Georgia Access Model and that web-brokers could limit consumer choice because they do not have an agreement with all insurers.
Expect Legal Challenges If Georgia’s Waiver Is Approved
Section 1332 allows states to waive certain ACA requirements only if waiver proposals meet certain procedural and substantive standards. Federal officials can grant a Section 1332 waiver only if a state demonstrates that its proposal meets certain “guardrails” outlined in the statute. Though the Trump administration has deemed the waiver application complete, it is not clear that Georgia’s waiver application meets Section 1332’s guardrails. If it is approved, legal challenges are likely.
"complete" - Google News
August 25, 2020 at 11:34PM
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Trump Administration Deems Georgia's 1332 Waiver Application, With Individual Market Restructuring, Complete - Health Affairs
"complete" - Google News
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